Tax Optimiser prepares your statutory accounts under one of two reporting frameworks, chosen to match the size of the company: FRS 105 for micro-entities and FRS 102 Section 1A for small companies. Which one a period uses is shown as the Statutory Accounts Type above the preview on the View Accounts screen, and you set a company’s default on its Companies House settings tab under Default Stat Account Type. This article explains how the two frameworks differ and the size thresholds — including the higher limits that apply to financial years beginning on or after 6 April 2025 — that decide which one your company qualifies for.
The two frameworks at a glance
Both produce a statement of financial position (balance sheet) and a profit and loss account in the Companies Act formats. The difference is how much you must disclose and how items are measured.
| FRS 105 (micro-entity) | FRS 102 Section 1A (small company) | |
|---|---|---|
| Who it is for | The smallest companies, that qualify as micro-entities | Companies that qualify as small but are above, or opt out of, the micro-entity regime |
| Disclosure | The legal minimum — four notes | Much fuller — over thirty possible notes plus accounting policies |
| Accounting policies note | Not required | Required |
| Measurement | Historical cost only — no revaluations or fair value | Full FRS 102 — revaluation of fixed assets and fair value (e.g. investment property) are available |
| Deferred tax | Not recognised | Recognised |
| Primary statements | Profit and loss account and balance sheet only | Profit and loss account and balance sheet; a statement of changes in equity is not always required, but may be needed when there are changes in equity other than profit or loss; a cash flow statement is optional |
| True and fair view | Presumed if the statutory formats are followed | Achieved through the notes and any extra disclosures needed |
| Directors’ report | Not required | Prepared, though small companies are exempt from filing it publicly |
In short, FRS 105 keeps everything as simple as the law allows — fewer notes, no policies, no fair value and no deferred tax — while FRS 102 Section 1A gives a more complete picture. You can see how the note sets differ in Notes for micro-entity (FRS 105) accounts and Notes and policies for small-company (FRS 102 1A) accounts, and look up any single note in the note-by-note guide.
Accountant firms in the beta can also choose a third type, full FRS 102: the Section 1A accounts without its disclosure exemptions, adding a statement of cash flows, a statement of changes in equity and further notes. See Full FRS 102 accounts (beta).
Which size is your company?
A company qualifies for a size band if it meets at least two of the three conditions in the tables below, normally for two consecutive years before the classification changes (special rules apply in a company’s first year). “Balance sheet total” means total assets before deducting liabilities.
The updated thresholds
The size limits were raised by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 and apply to financial years beginning on or after 6 April 2025. The employee limits are unchanged; the turnover and balance-sheet totals rose by roughly a half.
Micro-entity
| Criterion (meet any two) | Periods beginning before 6 Apr 2025 | Periods beginning on or after 6 Apr 2025 |
|---|---|---|
| Turnover | Not more than £632,000 | Not more than £1,000,000 |
| Balance sheet total | Not more than £316,000 | Not more than £500,000 |
| Average employees | Not more than 10 | Not more than 10 |
Small company
| Criterion (meet any two) | Periods beginning before 6 Apr 2025 | Periods beginning on or after 6 Apr 2025 |
|---|---|---|
| Turnover | Not more than £10.2 million | Not more than £15 million |
| Balance sheet total | Not more than £5.1 million | Not more than £7.5 million |
| Average employees | Not more than 50 | Not more than 50 |
Medium-sized company
| Criterion (meet any two) | Periods beginning before 6 Apr 2025 | Periods beginning on or after 6 Apr 2025 |
|---|---|---|
| Turnover | Not more than £36 million | Not more than £54 million |
| Balance sheet total | Not more than £18 million | Not more than £27 million |
| Average employees | Not more than 250 | Not more than 250 |
A company above the medium-sized limits is large.
Because the limits went up, some companies that were previously medium-sized now qualify as small, and some small companies now qualify as micro-entities — which can reduce what they have to prepare and disclose.
Medium-sized and large companies
A medium-sized or large company cannot use FRS 105 or Section 1A: it prepares full FRS 102 accounts, and they are audited unless the company is a subsidiary exempt under section 479A. Its accounts also include a strategic report, leave out the small companies regime statements, and are filed in full — filleting is only for small companies. Large companies add further disclosures, such as a section 172(1) statement and energy and carbon reporting. These are in beta for accountant firms: see Audited accounts (beta) and The strategic report.
A few companies cannot use these regimes
Size is not the only test. The micro-entity and small-company regimes are not available to some companies whatever their size — for example public companies (plcs), certain financial, insurance and regulated entities, and members of an ineligible group. Charitable companies cannot use FRS 105. If you are unsure whether your company qualifies, check with your accountant before choosing a framework.
Setting it in Tax Optimiser
Each accounting period carries its own Statutory Accounts Type, shown above the live preview on the View Accounts screen. To set the default a company starts from, open Organisations > Edit > Companies House and choose Default Stat Account Type. Changing the type rebuilds the accounts — the balance-sheet detail and the available notes change to match the framework. For a full tour of the screen, start with Touring the View Accounts screen.
The company’s size
The Period Overview shows a Company Size row. Tax Optimiser works it out from the trial balance and the number of employees for this year, last year and, where the earlier period is on file, the year before, applying the two-of-three test and the two-year rule (turnover is pro-rated for a period that is not twelve months). Open the row to see the working. If the answer is wrong — for example because the company is part of a larger group — set the size by hand, or tick that the company cannot use the small companies regime. You are warned when the accounts type does not suit the size.
